_—_ i © Journal 8.15 Simple and Compound Journal Entries Journal entries are of two types: 1. Simple (Journal) Entry and 2. Compound (Journal) Entry. 1. Simple Journal Entry: Simple Journal entry is a Journal accounts are affected, ie., one account is debited and another is credited with in the chapter are examples 1 entry in which only two an equal amount. The Journal entries discussed earlier i of Simple Journal Entries. 2, Compound Journal Entry: Compound Journal entry is a Journal & accounts are affected, i.e., one or more accounts are debited and/or one if % 5,000 is made to ntry in which more than two or more accounts are credited or vice versa. For example, a sale 0 Satish. It is discharged by Satish by paying & 2,000 in cash, balance to be paid later. ‘This transaction of sale affects three accounts as follow: Cash or Bank A/c to be debited by % 2,000 because increase in asset is debited. Sale to Satish is of 5,000, against which % 3,000 Cash or Bank Ale Asset Ale Satish’s Ale Asset Ale is receivable. Sales Ale Revenue Ale Sales A/c to becredited by® 5,000 because it is revenue. Entiy for the transaction is a compound entry as follows: Cash/Bank Ale . % 2,000 Satish’s A/c : oD % 3,000 To Sales Ale %5,000 Let us now take few Journal entries (Without GST). () Capital Introduction: Amit started business with % 50,000 as Capital, in Cash. ‘ z z Cash Ale wDr. 50,000 ‘To Capital A/c (Being the capital introduced in cash) Debit what comes in, 50,000 Credit the giver. (@eing the cap eee (ii) Capital Introduction: Amit introduced further capital of € 1,00,000 by cheque. Bank A/e Dr. 1,00,000 Debit the v ‘To Capital Ale lit the give (Being the capital introduced by cheque) - 1,00,000 Cres Being the capt ee (iii) Capital Introduction: Amit started business introducing capital of % 50,000 in cash and & 2,00,000 by cheque. Cash Ale Dr, 50,000 Debit what comes in. Bank A/e wDr. 2,00,000 Debit the receiver. To Capital A/c 2,50,000 Credit the giver. (Being the capital introduced in cash and by cheque) Scanned with CamScannere.16 Double Entry Book Keeping — op 2, . 0 (iv) Deposited & 10,000 in bank. x z Bank A/c Dr. 10,000 ‘To Cash Ale 10,000 (Being the cash deposited in bank) (v) Purchased goods of € 15,000 in cash. Purchases A/c Dr. 15,000 To Cash Ale 15,000, (Being the goods purchased) (vi) Purchased goods of € 75,000 against cheque. Purchases Ale -Dr. 75,000 ‘To Bank A/c 75,000 (Being the goods purchased against cheque) OO (vii) Purchased goods of & 5,000 in cush from Ramesh. Purchases Ale Dr. 5,000 To Cash Ale 5,000 (Being the goods purchased against cash) Debit the receive, Credit what goog uy, Debit all expenses Crodit what yoes gy Debit all expenses, Credit the giver Debit all expenses Credit what B0es out, Bxplanation: I is a cuslt wunsaction, Name given of the seller is not relevant (viii) Purchased goods of € 75,000 from Ramesh. 7 Purchases A/e --Dr. 75,000 To Ramesh (Being the goods purchased on credit) Explanation: It is a credit transaction since name 75,000 Debit all expenses, Credit the giver. of the seller is given andi 4s not stated whether cash or cheque is given or nol. (&) Goods costing € 7,500 returned to Ramesh. Ramesh Dr. 7,500 To Purchases Return/ Returns Outward A/e 7,500 (Being the goods purchased returned) Debit the receiver Credit all incomes and gains. Explanation: Goods purchased from Ramesh are returned to him. It met liability towards Ramesh has reduced, Since have been returned, Account is eredited, &) Sold goods for € 26,000 in cash, Cash Ale Dr. 25,000 ‘To Sales Ale 25,000 (Being the goods sold in cash) d goods purchastl d Purchases Return or Returns Outi Debit what comes!" Credit all incomes and gains. Scanned with CamScannersour 8.17 ap Sold goods for % 50,000 against cheque. . z x Dr. 50,000 Debit the re it all incomes Bank Ale piver. To Sales A/c 50,000 and gains. Being the yoods eold againot cheque) Sard goods to Bikram for & 10,000 against cash. Cash Ale .Dr. 10,000 To Sales Ale 10,000 Debit what comes in. Credit all incomes and gains. Gi) (Being the goods sold against cash) Explanation: It is ¢ Cash transaction. Nan not relevant. me of the purchaser (Bikram) is (ait) Sold goods to Ashutosh for % 20,000. ‘Ashutosh Dr. 20,000 Debit the receiver. To Sales A/c 20,000 Credit all incomes and gaine. (Being the goods sold on credit) sale is mada Janation: Itis a credit transaction since it 1s not stated whethe against cash or cheque and name of the person to w are sold is given. Exp! hom goods (siv) Ashutosh returned goods of € 6,000. Debitallexpensesand Sales Return/ Returns Inward A/c Dr. 5,000 losses. To Ashutosh 5,000 Credit the giver. (Being the sold goods returned) Goods sold to Ashutosh are returned by him. It means is receivable from him. Therefore, his account ie oredited. Since goods sold are returned, Sales Return or Returns Inward Account is debited. (w) Paid Salaries % 20,000, in cash. amount Explanation: Salaries Ale wDr. 20,000 Debit all expenses. To Cash Ale 20,000 Credit what goes out. (Being the salaries paid) (a ’) Paid Electricity Expenses % 2,000 in cash, Electricity Expenses Ale Dr. 2,000 Debit all exper ‘Lo Cash Ale 2,000 Credit. what goes out. (Being the electricity bill paid) Scanned with CamScanneryr Journal . 8.17 ) Sold goods for ® 50,000 against cheque, z zt Bank Alc wDr. 50,000 Debit'the To Sales Ale 50,000 Credit and gains. «i eceiver, incomes, (Being the goods sold against cheque) (xii) Sold goods to Bikram for & 10,000 against cash. Cash Alc Dr. 10,000 Debit what cymes in. ‘To Sales Ale 10,000 Credit all incomes and gains. (Being the goods sold against cash) Explanation: It is a Cash transaction. Name of the purchaser (Bikram) is not relevant, (eit) Sold goods to Ashutosh for € 20,000. “Ashutosh weDre 20,000, Debit the receiver. ‘To Sales Ale 20,000 Credit all incomes and gains (Being the goods sold on credit) Explanation: It is acredit transaction since it is not stated whether sale is made ‘against cash or cheque and name of the person to whom goods are sold is given. (xiv) Ashutosh returned goods of € 5,000. Debit allexpensesand Sales Return/ Returns Inward Ale Dr, 5,000 losses. ‘To Ashutosh 5,000 Credit the giver. (Being the sold goods returned) Explanation: Goods sold to Ashutosh are returned by him. It means less amount i receivable from him. Therefore. his account is credited. Since goods sold are returned, Sales Return or Returns Inward Account is debited. (w) Paid Salaries € 20,000, in cash. Salaries A/c Dr, 20,000 Dobit all oxpenses. ‘To Cash Ale 20,000 Credit what goes out. (Being the salaries paid) (xvi) Paid Electricity Expenses % 2,000 in cash, Electricity Expenses Ale ..Dr. 2,000 Debit all expenses. ‘To Cash Ale 2,000 Credit what goes out. (Being the electricity bill paid) Being the electricity DUT ARS 2 hits oh Scanned with CamScannerEO eee a8 Double Entry Book Keeping — Case, (avii) Withdrew cash & 5,000 for household expenses z .Dr. 5,000 Debit the receive Drawings A/c 5,000 Credit what goes , ou, ‘Yo Cash Ave (Being the drawings made) ravelling) & 5,000 to Rajiv. 5,000 Debit the receiver 5,000 Credit what goes my (xviii) Advance (say, Travelling Advance Ale ...Dr. To Cush Ave (Being the travelling advance given) Ming bill of € 4,750, balance refunded. Dr. 4,750 Debit all expenses Cash Ale 250 Debit what comes in To Travelling Advan 5,000 Credit the giver. (Being the travelling expenses adjusted against travelling advance) (xix) Rajiv submitted travel! ‘Travelling Expenses A/c Cree (ex) Rajiv submitted travelling bill of € 5,500, balance paid. ‘Travelling Expenses Ae Dr. 5,500 Debit all expenses, To Cash Ale 500. Credit what goes out. ‘To Travelling Advance Ale 5,000 Credit the giver. (Being the travelling expenses adjusted against travelling advance) Geing the tay (xi) Advance for machine € 25,000 by cheque to Kiran Machines. ‘Advance for Machine Alc ..Dr. 25,000 Debit the receiver. To Bank Ale 25,000 Credit the giver. (Being the advance given) (xxii) Paid 5,000 to Raman, «a creditor on account. Raman vDr, 5,000 Debit the receiver. To Cash Ale 5,000 Credit what goes out (Being the payment to creditor) ‘The transaction does not specify that payment is by chea? therefore, it is accounted as cash transaction. Explanation: (xxiii) Issued cheque of € 39,000 to Param, a creditor in settlement of his account of € 40,000. Param Dr. 40,000 Debit the receiver. To Bank Alc 39,000 Credit the give! To Discount Received A/c 1,000 Credit all incomes and gains. (Being the creditor paid by cheque, cash discount received) Explanation: Cheque is given for € 39,000 in settlement of his acco! % 40,000, Since no amount is due to Param after payment, © 100 is @ gain (profit) for the firm, Hence, it is credited to Discout! Received Account. nt of Scanned with CamScanner8.19 Journal (qv) Received cheque of & 29,500 from Surender, a debtor in settlement of his account of € 80,000. zg zg Bank Ale wDr. 29,500 Debit the receiver. Discount Allowed Ale ...Dr. 500 Debit all expenses. To Surender 30,000 Credit the giver. (Being the cheque received in full settlement, cash discount allowed) Explanation: Cheque is received for % 29,500 in settlement of his account of % 30,000. Since no-amount is due from Surender after payment, % 500 isa loss for the firm. Hence, it is debited to Discount Allowed . Account. (xxv) Paid Telephone Bill of % 1,000 in cash. Telephone Expenses A/c — ...Dr. 1,000 Debit all expenses. To Cash A/c 1,000 Credit what goes out. (Being the telephone bill paid) (xvi) Withdrew goods costing ® 5,000 for personal use. Drawings A/e wDr. 5,000 Debit the receiver. To Purchases A/c 5,000 Credit what goes out. (Being the drawings of goods made) (xvii) Goods costing & 2,500 given as samples. Sample Expenses Ale. ..Dr. | 2,500 Dehit all expenses. To Purchases A/e 2,500 Cre@it what goes out. (Being the goods given as samples) (xwiii) Goods costing & 2,500 given as donation. Donation A/c «Dr. 2,500 * Debit all expenses. To Purchases A/c 2,500 Credit what goes out. (Being the goods donated) (xxix) Rebate of 2,000 allowed to Raman on goods sold. Rebate Allowed A/c Dr. 2,000 Debit all expenses. To Raman 2,000 Credit the giver. (Being the rebate allowed) (xxx) Rebate of € 3,000 received from Kapil on. goods purchased. Kapil, Dr. 3,000 Debit the receiver. To Rebate Received A/c 3,000 Creditallincomesand gains. (Being the rebate received) Scanned with CamScannerCasting (Totalling) and Carry Forward: The process of totalling the amounts in the debit and credit columns on each page of a journal is termed as Casting or Totalling. This is required when the transactions of a business are voluminous and requires several pages of Journal. After totalling the amounts on each page, in the particular’s column, against the total, the words ‘Total c/f' (carried forward) are written. This shows the amount that has been carried forward to the next page. On the next page, in the particular’s column, against the amount brought forward, the words ‘Total b/f’ (brought forward) are written. This shows the amount that has been brought forward from the previous page In other words, it may be noted that, the number of transactions is very large, and these are recorded in number of pages in the journal book. Hence, at the end of each page of the journal book, the amount columns are totalled and carried forward (c/f) to the next page where such amounts are recorded as brought forward (b/f) balances. Types of Journal Entries: 1. Simple Journal Entry: It is the type of entry in which only two accounts are affected where one account is debited, and another account is credited with an equal amount. 2. Compound Journal Entry: It is the type of entry in which more than two accounts are affected i.e, one or more accounts are debited, and/or one or more accounts are credited or vice versa.